SPIEGEL Interview with Airbus CEO Thomas Enders 'EADS Should Never Have Signed the A400M Contract'
Airbus CEO Thomas Enders, 50, talks to SPIEGEL about the latest difficulties with the A380 super-jumbo, production cutbacks and why Airbus may have to scrap the A400M project.
SPIEGEL: Mr. Enders, on December 31 you won a bottle of champagne. You had wagered that Airbus would manage to complete 12 of your super-jumbo jets by the end of the year. That bottle could cost your company millions because, in the heat of the race against the clock, quality and safety may have fallen by the wayside.
Thomas Enders: No, we haven't made any compromises here. Our customers are generally very satisfied with the A380. But, as you know, it is an extremely complex aircraft, which now unfortunately -- like every new model during the introduction phase, I might add -- has some teething problems here and there. We're working intensively on this. And let me say this right away: None of these issues are related to safety. I've heard that SPIEGEL was recently leaked a very interesting document regarding this issue
SPIEGEL: in which Emirates, one of your major customers, complained on page after page about the current problems with your aircraft. These include singed power cables, bent sections of paneling and much more.
Enders: We take every piece of feedback from our customers very seriously. I don't want to play anything down. But I'll say it again: We're working on it and we'll soon have the problems solved.
Enders: Our internal processes have to be improved even further. For example, we still have too much reworking to do during final assembly. Something like that eats up time unnecessarily. But we're getting better and faster every day. We'll make it! And for the record: The latest problems have nothing to do with the wiring, which gave us major difficulties at the outset.
SPIEGEL: Is Emirates asking for money back?
Enders: That's not what it's about. The important thing is that we support our customers during the introduction phase and quickly get the problems under control. That's what our customers demand, and it's also in our interest.
SPIEGEL: Nevertheless, you want to deliver 18 aircraft this year. Are you sticking to that plan?
Enders: That is the plan.
SPIEGEL: We would be happy to make a new wager that it will be fewer than that.
Enders: Betting on the same thing twice is not very original.
SPIEGEL: You have already sold 200 aircraft. How many A380s will it take before you earn your first euro?
Enders: Every A380 contributes to the company's success, which was very presentable last year. And if you tell me where the break-even point is with the Boeing 787, I'll tell you where ours is with the A380.
SPIEGEL: We assume that you will have to sell another 400 to 600 aircraft to break even, which would be equivalent to roughly half of the global demand that you yourself have predicted for this class of aircraft. But how valid are all the old plans for the future now?
Enders: There is no doubt that this crisis will massively shake up the entire aviation industry. The main thing is to get through this lean period and set the right course now for the future. After all, aviation will continue to be a growth industry after the recession.
Graphic: Airbus orders and EADS turnover
Enders: That we will sell fewer planes this year than we did last year and we will have to reduce production. But we have full order books -- enough for seven years of production, based on the figures.
SPIEGEL: For the time being. The International Air Transport Association (IATA) fears that in 2009 alone customers won't be able to accept delivery of half of all ordered aircraft.
Enders: That's nonsense. I don't think much of those who want to attract attention with doom-and-gloom scenarios. In any case, thanks to our much-criticized Power 8 cost-cutting program, we correctly positioned ourselves well in advance of the current crisis. If we hadn't launched this program back in 2007, it would have to be created today. And, as I said, we are reducing our production. Instead of the planned 40 aircraft in the A320 family, by the end of the year we will only be assembling 34 planes per month in Hamburg and Toulouse.
SPIEGEL: In concrete terms, does this means reduced working hours? Or laying off subcontracted workers who, at your Hamburg plant alone, make up roughly one-third of the workforce?
Enders: Slow down! We're still a long way away from taking such steps. I see it as important in our planning that we can ramp up production quickly enough when things pick up again. And that will require a lot of good people.
SPIEGEL: It doesn't sound like you are planning large-scale layoffs.
Enders: Of course I can't rule out the possibility that we might have to make further cutbacks. But we have a certain cushion before we have to cut into the muscle.
SPIEGEL: How many cancellations has Airbus already had to absorb?
Enders: Fourteen since the beginning of the year. But nearly all the freed-up production deadlines are now being used by customers who wanted to receive their jets earlier. What's important is that we secure each of our individual deliveries. That's difficult because the financing system by the banks is still not in the best of health.
SPIEGEL: Germany and France -- where both major shareholders of your parent company EADS are located -- would now like to help out with export credit guarantees. It's a strange business model when your shareholder countries lend money so your customers can pay for the jets.
Enders: We're talking about guarantees here, the famous Hermes covers (Ed's note: "Hermes cover" is the commonly used name for a guarantee issued under the German government's export credit guarantee scheme, which protects exporters from risk). This is a common business practice for large-scale industries around the world. I think it's realistic to say that this year roughly half of all deliveries will receive such guarantees.
SPIEGEL: That could distort competition among airlines.
SPIEGEL: Lufthansa argues that it's primarily ailing airlines which benefit from such guarantees. It says that this punishes airlines that are well run and still finance their planes themselves or can pay for them with their own money.
Enders: That doesn't make sense to me, particularly since the guarantee process is nothing new. It's been there for years -- also in the US, I might add -- and has brought a good deal of money to these countries. It's certainly not a handout.
SPIEGEL: Dying airlines are kept alive longer.
Enders: Wrong. The government agencies that grant the guarantees carefully examine creditworthiness and business plans themselves.
- Part 1: 'EADS Should Never Have Signed the A400M Contract'
- Part 2: 'We've Made Big Mistakes'
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